SINGLE HSC/TIPPING THREAD (Previously "Why are gratuities not included in Fares?")

[RuthC]

Okay, let's get back to the topic. We are just trying to find a way for cruisers to pay the same for gratuities per room category.

The simplest way to accomplish that is to make the HSC mandatory in its entirety.

The only possible exception could be in the case of a well-documented complaint that was not resolved. The complaint would have to be about someone who was a recipient of the HSC, and only that person's portion be allowed to be reduced.

 

No need to create an entirely new method, with all the administrative and tax consequences attached to it, that adding gratuities to the fare would necessitate.

[Randyk47]

Hello Cruisemom42,

I really enjoy reading your posts. They are smart and unbiased.

Unfortunately, I can not say the same about a lot of HAL Cruisecritic members who spend A LOT of time bashing people who dare saying anything "against" HAL. I know I will get a lot of bad responses but I can take it... I know HAL has a great quality/price product but I also know it is not the best cruiseline out there... It's just a fact as it is not a luxury cruise line. Also, compared to Celebrity, Celebrity is superior but HAL has a better/quality price. This is why we purchase usually HAL cruises...

 

Okay, let's get back to the topic. We are just trying to find a way for cruisers to pay the same for gratuities per room category. You might not believe a percentage of cruisers opt out of paying their gratuities but unfortunately, it does happen. So this is maybe why HAL had to increase their gratuities from $12.50 to $13.50. We are now paying more for the "cheap skate" or the people who do not believe in tipping. This is why I can not understand why cruisers are against including the gratuities in the fare. I understand why HAL does not want to as it would increase the cost of the cruise and people might/would purchase another cruise from another cruise line. The losers in this story are the employees. HAL doesn't really care if about 20% of the cruisers opt out of paying gratuities but the crew does...

 

HAL should set up and explain they care for their employees so they have taken a huge decision by changing their fare and showing a final price before port taxes... The cruisers who do not believe in tipping or the "cheap skate" would look at the price of the cruise and if they fell it's too expensive, they would purchase another cruise line. Let's see how long the employees for the other cruise lines will want to work for them over HAL...

 

Service would stay the same or even improve as no crew would want to lose their position with innovator HAL...

 

Just my impartial opinion as I can say out loud what HAL do right AND do WRONG. Sorry die-hard HAL fan.

 

The Canadians!:cool:

 

I basically agree. I find it a bit funny that in response to a few who felt or thought there might be personal income tax implications on the members of the HSC pool if the HSC were rolled up into fare I added a notional $1.50 - $2.50. All of a sudden the thought went from protecting the staff to the objection of potentially benefiting tax collectors. I have enough trouble keeping up with US tax code much less knowing how half a dozen or more countries treat, track, and collect on wages, tips, service charges, etc., earned on cruise ships. Again other lines do this so it can be and is done. As for the additional administrative cost....well somebody is already taking whatever is received from the HSC and distributing it to the pool members so again not much if any change.

[cruisemom42]

I suspect that even the staunchest "auto gratuity hater" is smart enough to figure that out.

 

Truthfully, the situation bothers me a lot.

 

If the crew depend on it to the extent we are led to believe, it should not be discretionary. If the percentage of people floated here on CC remove the charge, it is not fair to those who depend on it. It is also not fair to those who do pay their allotted portion.

 

Is it discretionary or is it not discretionary? In my mind it's difficult to conceive of a situation that would merit removal. Most issues where people list reasons they've removed the HSC have little to do with the actual people who benefit. Plumbing issues, air circulation issues, quality of food, weather, entertainment -- all of these are not in their control. Only if a steward or server went out of their way to sabotage my trip would I consider it ... and even then, I would probably talk to the appropriate staff person/desk person about it rather than penalize ALL by removing the charge.

 

 

It seems to me that we have is a bizarre situation with a "discretionary" charge which it is pretty much "mandatory", except for those conscience-less monsters who remove it with nary a twinge of guilt and no repercussions whatsoever (said tongue-in-cheek). The cruise lines are depending on the goodwill of the many to fund something that should be considered (in my mind) a line item in their budget which is duly reviewed by the number crunchers with a view toward determining how much they need to charge us passengers to ensure they make back their outlay plus some reasonable profit.

 

 

What will happen if the percentage of people paying this HSC charge starts to drop? At some point, people may just think "Why should I subsidize this practice when 20-30-40 percent of the others onboard are getting a free (or at least reduced) ride?"

 

 

Also, no one has really answered my earlier question. How do lines manage this when they offer prepaid gratuities as a perk? A number of mass market lines do this, not sure if HAL does or not. And what about lines like Thomson that are not "luxury" but do not have a "discretionary" added service charge?

[Mary Ellen]

Makes sense to me:

 

Many Asian countries require the cruise lines to send a percentage of the tipped crew's salary (not their tips) back to their home country - through the manning agent - for tax purposes.

If the gratuities become part of the fare' date=' they also become part of the crew salary. That forces the cruise lines to send a much higher percentage of the crew earnings back to their government, who then takes a much deeper cut of those earnings.[/font']

In the process, the manning agent who is handling those funds, fiddles with the exchange rates and skims a nice percentage off for himself.

 

Depending on many factors, adding the gratuities to the fare can result in a net loss for the service staff.

[bUU]

... Is it discretionary or is it not discretionary? ... It seems to me that we have is a bizarre situation with a "discretionary" charge which it is pretty much "mandatory", except for those conscience-less monsters who remove it with nary a twinge of guilt and no repercussions whatsoever (said tongue-in-cheek).

I think you need to keep in mind that there are three words involved here: "mandatory", "optional", and "discretionary". Lot of people think that optional and discretionary are synonyms but they are not, especially in the context of what we're talking about here, i.e., tax implications. They are related words both implying some measure of control, but they do not mean the same thing. "Optional" is one of two states, "mandatory" being the other. In a case like this, where there is a standard amount that were talking about, "mandatory" means that standard amount, while "optional", taken literally, means a choice between that standard amount or nothing. "Discretionary" is a much more subtle word. It means a discernment about "how much". The result is not one state or another but rather someplace along a range. "Discretionary" can yield a high result or can yield a low result. As we've discussed, the high result can be even higher than the standard. And yes, the low result can even be nothing.

 

The tax laws that folks are referring to use rather specific language, such as the more subtle word "discretionary" rather than the more absolute word "optional".

 

 

 

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[RocketMan275]

Truthfully, the situation bothers me a lot.

 

If the crew depend on it to the extent we are led to believe, it should not be discretionary. If the percentage of people floated here on CC remove the charge, it is not fair to those who depend on it. It is also not fair to those who do pay their allotted portion.

 

Is it discretionary or is it not discretionary? In my mind it's difficult to conceive of a situation that would merit removal. Most issues where people list reasons they've removed the HSC have little to do with the actual people who benefit. Plumbing issues, air circulation issues, quality of food, weather, entertainment -- all of these are not in their control. Only if a steward or server went out of their way to sabotage my trip would I consider it ... and even then, I would probably talk to the appropriate staff person/desk person about it rather than penalize ALL by removing the charge.

 

 

It seems to me that we have is a bizarre situation with a "discretionary" charge which it is pretty much "mandatory", except for those conscience-less monsters who remove it with nary a twinge of guilt and no repercussions whatsoever (said tongue-in-cheek). The cruise lines are depending on the goodwill of the many to fund something that should be considered (in my mind) a line item in their budget which is duly reviewed by the number crunchers with a view toward determining how much they need to charge us passengers to ensure they make back their outlay plus some reasonable profit.

 

 

What will happen if the percentage of people paying this HSC charge starts to drop? At some point, people may just think "Why should I subsidize this practice when 20-30-40 percent of the others onboard are getting a free (or at least reduced) ride?"

 

 

Also, no one has really answered my earlier question. How do lines manage this when they offer prepaid gratuities as a perk? A number of mass market lines do this, not sure if HAL does or not. And what about lines like Thomson that are not "luxury" but do not have a "discretionary" added service charge?

 

To answer your question. the cruise line merely credits the HSC fund from other budget lines. It's still a gratuity for crew tax purposes since it is only a gratuity paid for on behalf of another. Not much different than if you were to decide to prepay my gratuities on my next cruise because you're such a nice person.

 

Which leads to the next question, why don't they just do that on every cruise? At some point, the tax guys would start asking if this was truly a gratuity paid by someone else or just a clever tax dodge?

[bUU]

Which leads to the next question, why don't they just do that on every cruise?

See above.

[grapau27]

I think you need to keep in mind that there are three words involved here: "mandatory", "optional", and "discretionary". Lot of people think that optional and discretionary are synonyms but they are not, especially in the context of what we're talking about here, i.e., tax implications. They are related words both implying some measure of control, but they do not mean the same thing. "Optional" is one of two states, "mandatory" being the other. In a case like this, where there is a standard amount that were talking about, "mandatory" means that standard amount, while "optional", taken literally, means a choice between that standard amount or nothing. "Discretionary" is a much more subtle word. It means a discernment about "how much". The result is not one state or another but rather someplace along a range. "Discretionary" can yield a high result or can yield a low result. As we've discussed, the high result can be even higher than the standard. And yes, the low result can even be nothing.

 

The tax laws that folks are referring to use rather specific language, such as the more subtle word "discretionary" rather than the more absolute word "optional".

 

 

 

This message may have been entered using voice recognition. Please excuse any typos.

I think everyone should pay their autogratuities mandatory because why should some people pay hundreds of dollars and others nothing.

Maybe a picture and name gallery of shame of all the people who pull the autogratuities be put up might encourage everyone to pay and no-one can stop them after day 2.

[cruisemom42]

I think you need to keep in mind that there are three words involved here: "mandatory", "optional", and "discretionary". Lot of people think that optional and discretionary are synonyms but they are not, especially in the context of what we're talking about here, i.e., tax implications. They are related words both implying some measure of control, but they do not mean the same thing. "Optional" is one of two states, "mandatory" being the other. In a case like this, where there is a standard amount that were talking about, "mandatory" means that standard amount, while "optional", taken literally, means a choice between that standard amount or nothing. "Discretionary" is a much more subtle word. It means a discernment about "how much". The result is not one state or another but rather someplace along a range. "Discretionary" can yield a high result or can yield a low result. As we've discussed, the high result can be even higher than the standard. And yes, the low result can even be nothing.

 

The tax laws that folks are referring to use rather specific language, such as the more subtle word "discretionary" rather than the more absolute word "optional".

 

 

Since I am just your average garden-variety non-legal type, and since Holland America nowhere uses any of these terms in their description of the HSC (very carefully, I might add), I am going to continue to use the terms as they are commonly expressed in this community, not in the legal sense. And since my dictionary defines "discretionary" as "left to discretion, or exercised at one's own discretion", I think that's within bounds.

 

And speaking of HAL, their exact wording states: "The Hotel Service Charge is paid entirely to Holland America Line crew members, and represents an important part of their compensation." How do they square this with the claim that this represents a "gratuity" and is not subject to taxation? I reiterate that I'm not a lawyer and do not understand the legal niceties involved, but it seems like walking a very narrow line.

I realize the crew come from various countries, all of which may differ. But it seems likely that at least some percentage of these countries will have arrived at the common-sense definition that is used, for example, by one state (link below) to distinguish between these two things. They define a freely given or "discretionary gratuity" (their words) as something that must be given directly to the recipient by the customer or added directly by the customer to a bill. Conversely, a "mandatory tip or gratuity" is defined as "a flat amount or flat percentage, whether designated as a tip, gratuity, or service charge, that the seller adds to the price of its taxable product or services, and is subject to tax. It does not matter if the seller subsequently pays over all or part to employees.

 

https://www.revenue.wi.gov/Pages/TaxPro/news-2014-140213.aspx

 

With this I am taking off my ill-fitting lawyer hat. I'm sure HAL has plenty of legal experts advising them as to what they can and cannot get away with in this regard.

But some lines do not have a "discretionary" service charge at all, and they manage to make it work.

And some mass market lines that operate in areas of the world where tipping is not well accepted have eliminated the "discretionary" service charge and include the cost in the cruise fare. (For example, Princess does this.) I haven't heard of any of them folding up shop or failing in these markets due to the change....

[doublebzz]

I think everyone should pay their autogratuities mandatory because why should some people pay hundreds of dollars and others nothing.

For many of those who feel this way, how do you feel about the fact that some cruisers pay hundreds, if not thousands, of dollars more for the same category cabin due to the almost daily price changes that occur on any given cruise?

[bUU]

Since I am just your average garden-variety non-legal type, and since Holland America nowhere uses any of these terms in their description of the HSC (very carefully, I might add), I am going to continue to use the terms as they are commonly expressed in this community, not in the legal sense. And since my dictionary defines "discretionary" as "left to discretion, or exercised at one's own discretion", I think that's within bounds.

We can agree to disagree.

 

And speaking of HAL, their exact wording states: "The Hotel Service Charge is paid entirely to Holland America Line crew members, and represents an important part of their compensation." How do they square this with the claim that this represents a "gratuity" and is not subject to taxation?

Because a third party has discretion about the amount of the HSC they pay.

 

I reiterate that I'm not a lawyer and do not understand the legal niceties involved, but it seems like walking a very narrow line.

I have worked on all three sides of the legal acrobatics (the provider, the receiver, and the third-party responsible for objectively assessing how well the provider is complying with the promises made to the receiver). In many cases, if the line isn't "very narrow" then either the provider or the receiver is sub-optimizing.

With this I am taking off my ill-fitting lawyer hat. I'm sure HAL has plenty of legal experts advising them as to what they can and cannot get away with in this regard.

Precisely. I've never seen four separate corporate entities (CCL, RCL, NCLH, DIS), the smallest of which is still a NASDAQ-100 component, all do the same thing in the same way, publicly, in direct and overt contradiction to the prevailing law. Sure it was interesting to research the laws of Indonesia, India, the Philippines, Croatia, etc., but a more reliable means of understanding what the law is is paradoxically letting the lawyers of these four corporations show you by way of what their respective companies all do.

But some lines do not have a "discretionary" service charge at all, and they manage to make it work.

Which lines? Among top cruise lines that market to North Americans, there are two sets of cruise lines, and only one of those two sets, the luxury brands such as Silver Sea, Seabourn, Regent Seven Seas, etc., don't have a discretionary gratuity of some sort. Even the European-based MSC employs this discretionary gratuity model despite having to act like an upstart in the North American market.

And some mass market lines that operate in areas of the world where tipping is not well accepted have eliminated the "discretionary" service charge and include the cost in the cruise fare. (For example, Princess does this.)

There are certain markets where all suppliers are prohibited from employing an HSC. Since the law prohibits anyone from doing so, it evens the playing field allowing all to do so.

 

So if you want that to be the case here, start working on your Members of Congress to pass new regulations on the industry.

Edited June 6, 2017 by bUU

[cruisemom42]

Which lines? Among top cruise lines that market to North Americans, there are two sets of cruise lines, and only one of those two sets, the luxury brands such as Silver Sea, Seabourn, Regent Seven Seas, etc., don't have a discretionary gratuity of some sort. Even the European-based MSC employs this discretionary gratuity model despite having to act like an upstart in the North American market.

 

 

Why must we limit it to a line that caters to North Americans? All of the lines pull from the same labor pools more or less. I've recognized servers, bar staff, stewards from one line on another at different points. Isn't the salient factor the tax obligations of the specific country and contract of the employee, not what market the ship is in?

 

 

According to this summary of tipping policy published on Cruise Critic for "big ship" (not luxury) lines:

-- Costa applies a non-discretionary service charge; i.e., it cannot be removed

-- On British mid-$$ cruise lines Saga and TUI/Thomson tipping is not expected or required

 

There are certain markets where all suppliers are prohibited from employing an HSC. Since the law prohibits anyone from doing so, it evens the playing field allowing all to do so.

 

 

It is not, as far as I know, "prohibited" to add a service charge in Australia. Some ships originally did, but too many Australians were "opting out" so it was changed. Not a matter of regulation but of practice.

[rafinmd]

I'm wondering why with the daily service charge being virtually universal among North American based mainstream cruise lines this is the only forum where it seems to be such an issue. My impression is also that several people who seldom if ever sail HAL are so vociferous here yet hardly ever raise the issue on the lines where they sail.

 

Am I the only one with this impression?

 

Roy

[kazu]

I'm wondering why with the daily service charge being virtually universal among North American based mainstream cruise lines this is the only forum where it seems to be such an issue. My impression is also that several people who seldom if ever sail HAL are so vociferous here yet hardly ever raise the issue on the lines where they sail.

 

Am I the only one with this impression?

 

Roy

 

You are very observant!

 

And raise valid points.

[bUU]

Why must we limit it to a line that caters to North Americans?

Because we're talking about marketing. Different market strategies work better in different market segments even within a country. Marketing even for food different between that typically sold in small market in the inner neighborhoods of large city versus that typically sold in large warehouse supermarkets in the suburbs of the same city. Y'know how they say, "All politics is local"? The analog in marketing is, "All marketing is segment-specific."

 

All of the lines pull from the same labor pools more or less.

"More or less" means "the words prior to these are not true". The vast majority of passengers of cruise lines that cater to North Americans are North Americans. The vast majority of passengers of cruise lines that cater to Brits are Brits. The vast majority of passengers of cruise lines that cater to Australians are Australians.

 

Isn't the salient factor the tax obligations of the specific country and contract of the employee, not what market the ship is in?

No. The laws of each jurisdiction matter. There are things that are best practice in the United States that are illegal in the UK, for example. There, companies don't have to worry competitors underselling them on those aspects, because doing so is illegal. Furthermore, other differences between segments also matter. Annuities are a great example: They're something that you wouldn't even attempt to package for customers of certain ages, but are highly prized by customers of other ages. These differences matter.

 

That's why companies work so hard to establish and maintain market segmentation. That way they can achieve the best results for their investors from each market segment without having to worry about a segment that needs less incentive to buy capitalizing on the advantages offered to a segment that needs more incentive. Going back to Disney for a minute, they now issue PIN code-secured special offers for resort vacations in Florida. This is a very heavy handed way to keep the market segments from mixing.

 

I'm wondering why with the daily service charge being virtually universal among North American based mainstream cruise lines this is the only forum where it seems to be such an issue.

What makes you think that is the case?

 

As far as I know, this is the only cruise line for which Cruise Critic has a single dedicated thread. The forums for other cruise lines have recurring threads on the topic. Carnival, Royal Caribbean, Princess, etc., all have had different threads on different aspects of the topic.

[RocketMan275]

Because we're talking about marketing. Different market strategies work better in different market segments even within a country. Marketing even for food different between that typically sold in small market in the inner neighborhoods of large city versus that typically sold in large warehouse supermarkets in the suburbs of the same city. Y'know how they say, "All politics is local"? The analog in marketing is, "All marketing is segment-specific."

 

Which is exactly why the cruise lines offer variants on the same cruise. This week it's Sip and Sail - included drink package which appeals this segment. Next week it's an included gratuity package that appeals to a different segment. The next week it will be OBC which appeals to another segment.

 

However, when you do the math, the cruise still costs about the same once you adjust for the value of the marketing package.

 

As far as I know, this is the only cruise line for which Cruise Critic has a single dedicated thread. The forums for other cruise lines have recurring threads on the topic. Carnival, Royal Caribbean, Princess, etc., all have had different threads on different aspects of the topic.

 

You think this forum has a dedicated gratuity thread because it's such a discussed topic here or is this topic discussed more because of the dedicated thread?

[Tatka]

I wonder why cruise lines switched from cash tips to automatically charged ones. They were paying behind the scenes folks somehow before.

Many people are actually ok with paying to crew that directly serves them, just like on land.

I'd switch back in a second. Increase fares to cover behind the scene folks (shouldn't be by much) and let pax pay waiter/assistant waiter/ cabin steward.

[Randyk47]

You think this forum has a dedicated gratuity thread because it's such a discussed topic here or is this topic discussed more because of the dedicated thread?

 

Could be. The old "supply creates demand" situation probably applies because it's here to be discussed so it will be. I certainly don't participate in or visit every cruise line section on Cruise Critic so can't speak to how or what is discussed relative this subject. The only other section I frequent is Silversea and there isn't a dedicated or long living thread on tips/gratuities. It has been mentioned and discussed but nowhere as in depth as here. Of course Silversea is in a different niche. As an all-inclusive line they say and publish that tips/gratuities are included in the basis fare, there is not separate identifiable charge. Though not a big issue the main discussion and debate when it is discussed is actually about tipping above and beyond. A number of regulars are against it, a number support it reluctantly but emphasis donating to the crew fund rather than to a person, and some tip out of hand to those they single out as going "above and beyond". Again not a big or continuing issue but it does come up from time to time.

[kazu]

.

 

<snip>

 

What makes you think that is the case?

 

As far as I know, this is the only cruise line for which Cruise Critic has a single dedicated thread. The forums for other cruise lines have recurring threads on the topic. Carnival, Royal Caribbean, Princess, etc., all have had different threads on different aspects of the topic.

 

History time: Host Walt created this as threads got derailed on a regular basis on tipping discussions. The point is that the only discussion is to be here to avoid derailing threads as I understood it when it was done at the time.

 

the fact that this is the only forum with a dedicated thread may speak to some alertness on the part of the moderator to avoid thread drift and disagreement over and over and over.

[RuthC]

History time: Host Walt created this as threads got derailed on a regular basis on tipping discussions. The point is that the only discussion is to be here to avoid derailing threads as I understood it when it was done at the time.

 

the fact that this is the only forum with a dedicated thread may speak to some alertness on the part of the moderator to avoid thread drift and disagreement over and over and over.

There were also several threads going on simultaneously, and very often at that. It was not uncommon to see several threads on the first page at the same time. These were not derailed threads, either, but all had to do with the same topic.

This thread tends to lie dormant for a period of time, then someone posts either to it, or starts a new thread which is merged here, and we're off to the races again for a while.

[bUU]

You think this forum has a dedicated gratuity thread because it's such a discussed topic here or is this topic discussed more because of the dedicated thread?

Neither.

 

This message may have been entered using voice recognition. Please excuse any typos.

[iancal]

I put it down to marketing. They want to display/advertise the most competitive price possible.

[ShariPDX]

I have a newbie question.

 

I'm fine with the tipping, but want to know in addition to the lump sum,

when are we expected to leave actual cash tips?

 

I've read that it's done for room service, but how do you judge the amount?

 

At a restaurant it's 20% of the bill, but we don't get a bill. :ship:

[ShariPDX]

I get frustrated when people remove the charges when they get onto the ship........

Crew should not suffer because of one's culture or thoughts on tipping.

 

Thanks for letting me vent.

 

I have a newbie question.

 

I'm fine with the tipping, but want to know in addition to the lump sum,

when are we expected to leave actual cash tips?

 

I've read that it's done for room service, but how do you judge the amount?

 

At a restaurant it's 20% of the bill, but we don't get a bill.

[Randyk47]

I have a newbie question.

 

I'm fine with the tipping, but want to know in addition to the lump sum,

when are we expected to leave actual cash tips?

 

I've read that it's done for room service, but how do you judge the amount?

 

At a restaurant it's 20% of the bill, but we don't get a bill. :ship:

 

There actually isn't a situation where you are "expected to leave actual cash tips". In the case of room service many here tip but it's not a must and it's not really based on a percentage of the value of whatever you've ordered. For instance, every morning my wife and I usually order coffee, juice, and maybe croissant each. Typically I'll tip $2 to $4 but that's for the service and not so much on the perceived value of what is being delivered.